Long-time Progress Energy CEO Bill Johnson, who was expected to lead the new Duke Energy, has abruptly resigned.
The announcement issued Tuesday morning by Charlotte-based Duke Energy said its board of directors had appointed Jim Rogers, 64, as president and chief executive officer of the combined company, effective immediately.
According to the statement, Bill Johnson, 58, ?resigned as president and chief executive officer of the combined company by mutual agreement.??
The stunning resignation was announced before the stock market opened for trading, and a day after South Carolina regulators approved the merger. North Carolina regulators approved the $32 billion deal Friday. The merger closed at 4:02 p.m. Monday.
The regulatory approval in this state was made on the assurance that Johnson would lead the combined company and that the utility would maintain a significant presence in downtown Raleigh.
Duke officials are not disclosing how long they had known that Johnson would be out a job, but the decision was announced to top Duke executives on Monday. Rogers has been making calls through out the day Tuesday to assure officials that nothing has gone awry with the $32 billion utility deal.
On one of those calls Rogers told The News & Observer on Tuesday that he had spoken to executives from the former Progress to encourage their continued support for the merger. Rogers has also called state regulators to assure them about the benefits of the deal.
?I reached out and had conversations yesterday with the top leaders from Progress who are part of the [Duke executive] team,? Rogers said. ?And then this morning I had a telephone call with the executive leadership team, which is the top 60 executives of the new team, and asked them to step up and work hard to help us move through this.?
Robert Gruber, the state?s consumer advocate in utility matters who had supported the Progress-Duke merger, said he spoke with Rogers in the morning by phone and got assurances the combined Duke will honor the commitments it made to regulators.
But it was clear that the internal shakeup is causing unease.
?If the [N.C. Utilities] Commission had known about this prior to the merger, it might have been a different result,? said Gruber, who directs the Public Staff consumer advocacy agency. ?The Public staff has a lot of respect for Mr. Johnson and confidence in him. We?re not sure how this will work without him.?
Duke?s executive and management ranks include significant representation by officials who came from Progress.
It?s not clear if the N.C. Utilities Commission has any recourse to scrutinize Johnson?s departure. The chairman of the N.C. Utilities Commission, Edward Finley Jr., issued a statement expressing his surprise at the recent developments.
?My understanding based on Duke and Progress representations in our hearing was that Johnson would be CEO of the combined company,? Finley said in an email. ?His departure on the same day the merger is closed and three days after our order may raise questions in the minds of some as to the timing of the decision by those involved in it.?
When the merger was announced in January 2011, both companies said Johnson would become CEO of the country?s largest utility. His plan was to move to Charlotte, and various members of Progress Energy?s executive team were relocating as well.
Less than 24 hours ago, Johnson?s media relations team was scheduling interviews with Johnson and national and local journalists. The calls were to take place today.
?To me it raises questions about their commitment to [maintain] a significant presence in Raleigh,? Gruber said. ?What is it going to mean for Raleigh, and what does it mean for personnel from Progress and all those who were loyal to Johnson??
In his email to the N&O, Finley said preserving the promises made to justify the merger must remain a priority: ?While management structure and succession are important, a more significant emphasis will be on ensuring that the benefits to the ratepayers will materialize as forecasted.?
There was no official explanation given for Johnson?s resignation and Duke executives provided scant information in a morning conference call with investors.
?We wish him the best in his future endeavors,? said Ann Maynard Gray, lead director of Duke Energy?s board of directors, during the call. ?We won?t be commenting further with regards to the board?s decision on Bill?s resignation.?
But Duke University securities law professor James Cox speculated the rupture may have resulted from nothing more than the typical clash of titanic egos that go hand-in-hand with such deals. Those internal conflicts typically play out in the months after a merger, but the lengthy regulatory review of this deal could have altered the timetable.
?As they went down this long torturous path of trying to get regulatory approval...they each may have learned something about the other?s management style and tensions developed in that relationship,? Cox said.
Bargains struck by corporate executives to share management power following a merger or acquisition ?are always tenuous,? Cox said, with the inevitable result being that ?there are these battles that go on and somebody gets pushed out.?
Johnson sent an email to Progress employees just before noon, encouraging his former workers to move forward with the merged company even though he won?t be there to lead them.
?I am honored to have led you ? you are a highly talented workforce that makes up an important part of the combined company,? Johnson?s email said. ?I have been continually impressed with the level of professionalism and skill of the employees of both companies.
?I know you will be instrumental in taking Duke Energy forward,? Johnson concluded.
On the conference call with Wall Street analysts, Rogers emphasized Duke?s harmonious future, saying nothing about the startling shakeup that marks the beginning of the new company. Later that morning Rogers continued emphasizing those points.
?This is Day One and we are all one group of employees,? Rogers said.
?I plan to work hard to bring us together and make sure we achieve our objectives,? he said. ?We focus on the integration plan. That?s going to change the synergies. The synergies are going to drive the earnings. We really have to deliver for The Street.?
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